You might have seen it for the iPad, now ThinkGeek has released the JOYSTICK-IT for the iPhone and iPod touch, a retro arcade style joystick for enhanced gaming precision. Here is more info:

The JOYSTICK-IT gives you a real physical joystick for increased precision with touchscreen based games. Simply press down to attach the JOYSTICK-IT to your iPhone's screen for improved gaming. No wires or batteries needed.

JOYSTICK-IT works with any game that features a fixed virtual on-screen control pad (not for swipe style games). It will not harm screen, plus it?s removable and repositionable without leaving a residue. It's made with solid milled-aluminum with laser etched crosshair design for thumb traction.